With the business potentially at an important milestone, we thought we'd take a closer look at Bed Bath & Beyond Inc.'s (NASDAQ:BBBY) future prospects. Bed Bath & Beyond Inc., together with its subsidiaries, operates a chain of retail stores. The US$2.1b market-cap company posted a loss in its most recent financial year of US$151m and a latest trailing-twelve-month loss of US$190m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Bed Bath & Beyond's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Bed Bath & Beyond is bordering on breakeven, according to the 18 American Specialty Retail analysts. They expect the company to post a final loss in 2022, before turning a profit of US$152m in 2023. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 44% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Bed Bath & Beyond's growth isn’t the focus of this broad overview, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Bed Bath & Beyond is its debt-to-equity ratio of 126%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Bed Bath & Beyond which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Bed Bath & Beyond, take a look at Bed Bath & Beyond's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:
- Valuation: What is Bed Bath & Beyond worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Bed Bath & Beyond is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Bed Bath & Beyond’s board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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